Vodafone shows doubt over Cegetel bid

For an executive with one of Europe's best acquisition track records, Chris Gent, chief executive officer (CEO) of Vodafone Group PLC, may run out of luck with his plans to buy the French telecommunication company Cegetel SA.

Speaking Thursday at an event in Italy, Gent expressed doubt about whether his company will succeed in convincing Paris-based Vivendi Universal SA to sell its 44 percent stake in Cegetel, which controls 80 percent of the French mobile operator Société Française du Radiotéléphone SA (SFR).

Vodafone, in Newbury, England, owns 15 percent of Cegetel, while London-based BT Group PLC owns 26 percent. Vodafone has held talks with BT, which is interested in selling its stake in the French company.

It is now unclear, Gent said, whether Vivendi Universal will sell its stake in Cegetel. "It will depend on whether what we can make available is of sufficient interest to Vivendi," he said at a news conference. "We have discussed the issue, and I have to say that my own view is that, in current market conditions, this might not happen."

Vivendi might decide that telecommunication is so important to the company's strategy that it may want to dispose of other assets, according to Gent. "I have no idea what the outcome will be," he said.

A Vodafone spokesman confirmed Gent's remarks but added the company has not officially said it is in talks with Vivendi Universal. "It is our policy not to comment on speculation," the spokesman said. Still, it's no secret that Vodafone is keen to gain a strong foothold in France, judging by Vodafone's European expansion strategy and, more concretely, Gent's remarks on the Cegetel issue.

On Friday, the French newspaper La Tribune, citing unnamed sources from advisor banks, reported that Vivendi Universal hopes to increase its stake in Cegetel, using proceeds from the planned sale of its publishing operations.

The report said Vivendi Universal chairman and CEO Jean-René Fourtou plans to resist any bid from Vodafone because of concerns that without SFR, the company would hold mostly U.S. assets and could thus be at the mercy of some of the world's toughest investors.

If true, Gent can toss his acquisition strategy papers into the waste bin and wait for another opportunity.

France is the only major European wireless market in which Vodafone doesn't have a controlling stake in a domestic operator.

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